Sydecar’s Post

Raising Capital as a first-time Venture Fund manager is always challenging. There are 4 P's of Fundraising for Emerging managers as per Sapphire Ventures and Kauffman Fellows Journal. 🕒 Patience 🌱 Fundraising as a first-time manager almost always takes longer than you anticipate. Start building relationships with LPs at least 12 months before you even think of raising a fund. LPs are getting into a relationship with you, so they would love to understand you better over a period of time. ⏳💼 💪 Persistence 🚫 As an emerging manager, be prepared to hear “no” a lot. 🙅♂️ Unless you’re a manager coming from an established firm, with a strong, transferable track record, and a following of LPs waiting for you to break out and start your own fund, you will likely have dozens if not hundreds of LP meetings. 📉👂 🗣️ Persuasive 🤝 📞💼 The market is overflowing with venture capital firms, and with Family offices tending to go direct than investing in Funds, you need to have a clear and laser-focused pitch and strategy on why the LP needs to invest in your fund. 💎💼 🤔 Pragmatic 💡 At SoHo Ventures, we have seen first-time fund managers looking to raise a $100 MM fund. Though it is doable in rare cases, you need to be pragmatic for your first fund. Keep your fund small, and accept smaller checks. LPs generally tend to reduce their risk with first-time managers. The first fund is always the hardest to raise and LPs tend to be more loyal to existing managers. You want to take that first step, prove your track record, and go big with your Fund 2 or 3. 💰📈

James Lyle, Scott Harris Post: In the ever-evolving world of Venture Capital, how can innovative investment strategies be leveraged to solve some of the world's most complex issues? Our latest article explores just that 🌍💪 Meet MonCap, a bold venture capital firm based out of Boulder, Colorado. Their mission? To fuel transformational growth in companies dedicated to tackling global problems. Backed by some of the world's largest family offices and institutions, they're ready to invest $10-$100mm into companies poised to make a change. 🚀💵 But it doesn't stop at investing - MonCap champions a partnership approach, offering a wealth of resources to spur exponential growth. As they say, it's all about creating bespoke solutions for sellers, management teams, and strategic partners. 🔄💥 Founded by James Lyle and Scott Harris, @MonCap's collective experience spans across industries and geographies. So, no matter where you are or what sector you’re in, you're invited to be part of this ambitious goal of changing the world. 🌐🤝 Do you want to learn more about how Venture Capital is being transformed? Read our article! https://lnkd.in/e-UjCig2 #MonCap #VentureCapital #Innovation #InvestmentStrategies #GlobalSolutions

The article titled "How Venture Capitalists Measure Returns" from The Holloway Guide to Raising Venture Capital provides insights into the metrics used by venture capitalists (VCs) to measure returns on investments. The article acknowledges the complexity of IRR calculations and provides additional resources for understanding it. It also discusses other relevant fund metrics. https://lnkd.in/gzfWre_K

Deploying $50m/year → does it make sense to start a fund? Sharing part of this week’s Last Money In Media post written by my partner Zachary. -- A syndicate is a way to build quickly; a fund, albeit much slower to get started,  is a way to build something much bigger - and not just from an AUM standpoint. At $30m-50m likely deployed this year, I would not raise a fund to go big at first / I would only raise a fund to build a world class firm. I’ll be the first to admit that having a fund requires a different level of discipline due to a mix of more aligned carry incentives and constraints. When your losers go against your winners on the carry component, you need to think much more deeply about your model (e.g. portfolio construction); similarly when you have limited shots on goal and limited capital, every investment requires stronger conviction. And venture capital as a fund is a much different business when your losers go against winners. Yes, venture capital generally outperforms every other asset class but the dispersion of returns is wider in venture than anywhere else with almost half of funds returning 1x capital or less…meaning if you go the fund route, you better be best in class at your job to receive any meaningful upside. And sometimes being great at your job is outside of your control - I know many people that launched funds in 2021 that will not perform well because they deployed too much at the top of the market - that’s mostly on them for a lack of discipline/restraint and partially just tough luck. But most of those GPs won’t see a dime of carry with many not able to raise fund II. If I (Zach) were to raise a fund today, the opportunity cost is also substantial - given the effort, I would pull back syndicating almost completely, which means I’m basically giving up a $100M recurring fund ($30-40m/year = $100m (ish) fund likely) and giving up superior carry economics in the process. -- Powered by Sydecar & Forge, Last Money In Media is the most actionable venture capital newsletter. Written by Zachary Ginsburg and Alex Pattis, who have deployed >$200M across 800 SPVs.

Here's what it means to create a financial model for a VC fund, complete with templates & examples that you can use: Warning: not for the faint of heart - https://lnkd.in/g5_CBsHj 📈 #startup #venturecapital #funding

The Venture Capital Fund Model is a comprehensive tool designed to analyze the financial aspects of a venture capital fund, including its Management Company and supporting Venture Builder. The model generates financial statements, calculates relevant metrics, and provides graphical representations of key performance indicators (KPIs). It offers insights into fund management, deal structuring, and financial performance, enabling informed decision-making and strategic planning. Key Components: – Limited Partners (LPs) and General Partners (GPs) Assumptions: Allows users to set the number of LPs, their subscription amounts, GP commitment percentage, management fees, carried interest percentage, and other fund characteristics. – Deals: Enables users to input details of venture deals, including venture names, maturity stage, transaction type, initial deal amount, ownership, and follow-on investments. – Financing Type: Allows users to set interest rates for loan type deals and discounts to the VC for convertible deals. – Financial Statements: Presents the financial statements of the fund, including income statement, balance sheet, and cash flow statement. – Management Company Expenses: Calculates expenses of the Management Company, including labor costs, administrative costs, and any required equity injections. – Venture Builder Assumptions: Enables users to set assumptions for the Venture Builder company, including the percentage of startups graduating to different funding stages, labor costs, and operating expenses. – Graphs: Provides graphical summaries of major KPIs from both balance sheet and income statement perspectives. – Checks: Ensures the accuracy and functionality of the model by aggregating various checks performed across worksheets. Key Benefits: – Informed Decision Making: Provides stakeholders with insights into fund performance, deal structuring, and financial viability, enabling informed decision-making. – Strategic Planning: Facilitates strategic planning by presenting financial projections, identifying trends, and evaluating investment opportunities. – Performance Tracking: Allows users to track fund performance, deal flow, and financial metrics over time, aiding in performance evaluation and goal setting. – Efficiency Improvement: Helps streamline fund management processes, optimize deal structuring, and identify areas for cost reduction or revenue enhancement. 💼💰 Plan Your Venture Capital Fund with Confidence! 💡📈Optimize your investment strategy with our 10-Year Venture Capital Fund Model. This comprehensive tool provides detailed financial projections, and metrics tailored specifically for venture capital funds. This model will help you forecast fund performance, assess investment opportunities, and attract potential investors. Download now and take the first step towards building a successful venture capital portfolio! #VentureCapital #FinanceModel #Investment #Entrepreneurship

Venture Capital Fund Metrics Cheat Sheet Use these tools to Evaluate VC Fund Performance.... 👇 If you are a founder, investors or fund manager this cheat sheet will help you to answer following questions: • When should you use multiple calculations versus IRR calculations? What are the differences? • How is your particular investment performing right now? • How has the company performed historically? • Which metrics are more vital to limited partners (LPs)? Which metrics are more important to general partners (GPs)? • How is your overall fund performing? • How is your fund doing compared to similar VC funds with the same vintage year There are nine venture capital metrics that used to determine fund health and performance are separated into multiple calculations and internal rate of return (IRR) calculations. The multiple calculations include: • Multiple on Invested Capital (MOIC) • Gross Total Value to Paid-In Capital (Gross TVPI) • Net Total Value to Paid-In Capital (Net TVPI) • Residual Value per Paid-In Capital (RVPI) • Distributions per Paid-In Capital (DPI) The Internal Rate of Return (IRR) calculations are as follows: • Gross IRR • Gross Realized IRR • Net IRR • Net Realized IRR The Difference Between Multiple and IRR Calculations: While multiple calculations yield quick figures meant to show you the total value of a portfolio, they don’t consider time. They merely tell you how much money you’re going to receive from an investment. In contrast, IRR calculations do consider timing to tell you how much you will make and when you will get a return on your investment. As such, IRR calculations can give investors a clearer picture of an investment’s potential. As tempting as it is to only pay attention to IRR calculations, there’s a reason why multiple and IRR calculations are usually reported together. Together, they show you the whole picture. Accordingly, you should look at both types of calculations when determining the health of your fund. Here is the download link to the high-res version of the VC Cheat Sheet: https://lnkd.in/e4-fdB3x Here is a detailed explanation of all 9 VC Cheat Sheet Calculations: https://lnkd.in/e9daMHMq Source: Diligent Equity 👉 Interested in startups and venture capital? Subscribed to Venture Curator Newsletter and Join 26000 founders & investors: https://lnkd.in/dKZQKHg2 . #startup #venturecapital #funding #fundraising #vc #vcfunding #vcfund #founders #fundraising #job #siliconvalley #summerinternship #usa #indianstartups #startups #business #VC

The ever-evolving world of venture investing requires you to constantly reevaluate where the future lies. Today, let’s delve into something that’s growing but comes with much debate: hybrid venture investing.

🚀 83 new corporate venture funds were launched in 2023: - 46% were first-time CVCs with a median fund size of $100 million - 54% were successor funds with a median fund size of $200 million - 25% of new funds listed A.I. as an investment focus Learn more about these new CVC funds in my latest article for Touchdown Ventures.